CP Daily: Wednesday October 27, 2021

Published 00:27 on October 28, 2021  /  Last updated at 00:27 on October 28, 2021  /  Newsletter  /  No Comments

A daily summary of our news plus bite-sized updates from around the world.

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TOP STORY

Carbon-backed crypto initiative buys nearly 7 mln offsets in first week after launch

A digital currency protocol backed by carbon credits has purchased close to 7 million VCS units in the first week after its launch, while reaching a market cap of over $1.1 billion.

AMERICAS

Clean energy tax credits seen as last climate chance in US budget package

Clean energy tax credits appear to be the last climate component of US President Joe Biden’s social spending bill that may survive Congressional cuts, but experts said Wednesday that these measures could still help meet the country’s Paris Agreement targets.

Pennsylvania Democratic attorney general signals opposition to RGGI in gubernatorial bid

Pennsylvania Attorney General Josh Shapiro (D) on Wednesday indicated he may not support the state’s participation in the Northeast US RGGI carbon market if elected as governor next November, representing a potential rift with the current administration’s plan to enter the power sector cap-and-trade scheme.

California distributes 1.2 mln offsets just before cap-and-trade surrender deadline

California handed out the last batch of offsets this week prior to the third full compliance deadline for the WCI carbon market, while the number of credits with no invalidation risk swelled due to a large forestry project, according to data published by state regulator ARB on Wednesday.

EMEA

EU banking capital proposal eases fears over carbon trading, says trade group

EU proposals for applying international banking rules are likely to shield the bloc’s carbon market from being impacted by higher capital costs for banks, a financial industry body said on Wednesday.

Euro Markets: EUAs shrug off early losses to test recent highs

Carbon prices climbed late in the day on Wednesday to flirt with their recent highs after drifting in concert with energy markets in the morning amid a slowdown in trading activity.

UK keeps carbon price floor in place for another year

The UK will maintain over fiscal 2023-24 its freeze on the rate of its Carbon Price Support tax on power sector CO2 emissions, the finance ministry said in its budget on Wednesday, while cutting fuel duty on domestic flights and cancelling a planned rate rise for cars.

ASIA PACIFIC

Government offset announcement stuns China’s carbon market

China’s carbon market was paralysed on Wednesday as traders stepped back to digest news that the government will allow all CCER types to be used for compliance in the national emissions trading scheme.

Chinese banks tie interest rate to carbon emissions performances

Some Chinese lenders have begun offering interest rates linked to emission levels, as the nation’s financial sector strive to develop new climate-related products.

INTERNATIONAL

Global investors call for accelerated climate policy action as COP26 nears

Over 700 institutional investors representing $52 trillion in managed assets have called for governments to take ambitious policy action to avoid a “catastrophic” rise in global temperatures and to manage climate risk, according to a statement from the combined group of financial heavyweights released on Wednesday.

VOLUNTARY

Host countries can do more to leverage finance flows from the VCM -report

Host nations can do more to tap the voluntary carbon market (VCM) to help stimulate clean technology investments and help meet their Paris emissions pledges, a multi-stakeholder report published on Wednesday found.

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CONFERENCE

Prospero Events’ Carbon Trading and Markets 2021 virtual conference now takes place on Dec. 6-7. This virtual conference will gather C-level experts responsible for carbon & power trading, carbon markets & pricing, climate policy, ETS and market analysis from leading European energy companies as well as banks and other financial institutions. The conference will focus on discussing the ongoing challenges and trends in carbon markets and carbon trading insights. You can expect presentations and case studies from MOL Group, Enel, HeidelbergCement AG, Fortum, Berenberg, and more. Up to 90 minutes of Q&A and networking time.

BITE-SIZED UPDATES FROM AROUND THE WORLD

Carbon Pulse has teamed up with CME Group to provide its clients with regular updates on the global carbon markets. Check out these briefs for the latest insights on pressing trends and events impacting markets, published every other week. Registration required

INTERNATIONAL

Ships passing in the night – CEOs from the world’s biggest shipping companies and government representatives from maritime states will convene in Glasgow at a cross-industry decarbonisation conference next month to coincide with COP26. The shipping industry’s sideline event, ‘Shaping the Future of Shipping’, is being coined as the largest assembly of shipping executives and maritime states, bringing together leaders from the shipping, energy, climate sectors, and international ministers to translate government ambitions set out at COP’s leaders’ summit and identify actions and recommendations for all parties, including IMO member states. The ministerial-level event will be held Nov. 6 and feature some of the world’s leading figures from shipping, energy, and finance. The discussions are set to inform the UN climate summit and the upcoming decarbonisation-defining IMO climate committee meeting. (gCaptain)

By the numbers – At every COP, each country brings its own delegation of politicians, negotiators and experts to discuss and agree – or not – a way forward for global climate action. In a new analysis, Carbon Brief reveals for the first time the biggest delegations, the best-attended COPs, and how the gender balance of delegations has shifted over time.

Happy talks – From COVID-19 protocols to bad weather, long security lines, transportation options, and food offerings, there’s a lot that can go wrong at the COP26 UN climate negotiations in Glasgow starting next week, Bloomberg reports. Even in a good year there’s an endless list of things that could go awry. Past hosts have come under fire for unhealthy food and insensitive artwork. Anything can set off a grumpy negotiator after an exhausting fortnight of poring over the minutiae of international law.

ASIA PACIFIC

It’s more about the journey – World number 3 GHG emitter India has rejected calls to announce a net zero target and said it was more important for the world to lay out a pathway to reduce such emissions. Environment secretary RP Gupta said announcing net zero was not the solution to the climate crisis, dashing hopes that the nation will set a goal at next week’s COP26 talks in Glasgow even though Prime Minister Narendra Modi will attend. (Reuters)

Japan backs net zero shipping – Tetsuo Saito, Japan’s minister of transport, stated that Japan will aim to achieve net zero emissions from international shipping by 2050, according to a ministry press release. At the 77th session of the UN IMO Marine Environment Protection Committee to be held in November, Japan will jointly propose with Costa Rica, Norway, the US, and the UK that this target should be set as a common level of ambition. The Japanese government will also promote development and demonstration of zero-emission ships such as hydrogen-fuelled ships or ammonia-fuelled ships, which are essential to realise the zero emissions target, the press release said.

Regional grid – Southeast Asian nations are speeding up their plans to transmit renewable energy through a proposed regional power grid, with first trials set for 2022, as the area strives to meet climate change targets, government and company officials have said, Channel News Asia reports. Some members of the Association of Southeast Asian Nations (ASEA) are also exploring CCS technology to reduce emissions, and ASEAN has proposed that 23% of primary energy come from renewable sources by 2025. Singapore will start importing renewable electricity from Malaysia by 2022, and later that year utilities in ASEAN will start transmitting the first 100 MW of electricity under a Laos-Thailand-Malaysia-Singapore power integration initiative as part of a regional grid project. The ASEAN grid, an idea first proposed in 1999 to enhance regional energy security, will now facilitate renewable power transmission. Australia has also been tapped for its green energy supplies with plans to export to Singapore.

AMERICAS

Awaiting in Washington – The US EPA is expected to release its much-awaited proposal aimed at reining in methane emissions Thursday, sources told Politico. Administration officials will meet with the White House Office of Management and Budget in the morning, with the proposals to be made public later, though as of Tuesday afternoon questions remained “over monitoring technology and frequency,” one of the people familiar with the negotiations said. Democrats bracing to go into COP26 without major climate legislation are pointing to the methane proposal as something tangible to show that the US is committed to reducing its GHG emissions. (Politico)

Enshrining in Scotia – The Nova Scotia Progressive Conservative government has introduced legislation that will enshrine in law 28 goals related to addressing climate change, including ending the use of coal to generate electricity 10 years earlier than scheduled. The bill, tabled Wednesday by Environment and Climate Change Minister Tim Halman, includes goals such as supplying 80% of the province’s electricity using renewables by 2030, reducing emissions to at least 53% below 2005 levels by 2030, and achieving net zero by 2050. Much of the bill is similar to legislation the former Liberal government introduced and passed in 2019, but the Liberals did not place the goals in the act. Instead, they left them to be developed through consultation and then placed in regulations, but the bill was never proclaimed. The path to achieving these goals will be set out in several reports that are scheduled to come beginning next spring. (CBC)

Negating in New York – The New York Department of Environmental Conservation (DEC) on Wednesday denied two proposed natural gas power plants by citing the state’s new climate law. The denial of the two proposed plants, Astoria Gas Turbine Power in Queens and Danskammer Energy Center in Newburgh, marked a milestone in the implementation of the state’s Climate Leadership and Community Protection Act. The energy plant proposals conflict with more long-term goals of the state’s climate law, including its target to reduce emissions 40% below 1990 levels by 2030 and 85% by 2050, according to the denial letter from the DEC. (Times Union)

RIP in Rip City – Portland, Oregon this week released a sharply reduced version of its carbon tax plan that fell short last year. The original proposal called for a $25 tax per tonne of carbon emitted, and while the new proposal calls for a much higher rate – $250/tonne – the tax will cover a narrower range of emissions from NOx, SOx, PM, and volatile organic compounds. Under the 2020 plan, the base fee and variable tax would have raised $11.3 mln a year, but the new proposal would raise only about $2 mln in total. (Willamette Week)

EMEA

Turow tussle – The EU is threatening to block budget payments to Poland — amounting to €18 mln and growing — over Warsaw’s refusal to comply with a €500,000/day fine for not shutting down its Turow lignite mine. The European Commission sent a letter to the Polish government last week requesting information about its shut-down plan and saying the EU would cover the amount owed — including interest — by offsetting it against future payments from the bloc’s budget. (Bloomberg)

Renewable ramping – Delaying renewables expansion in the EU would drive up carbon prices and result in higher electricity costs for industries while a fast renewable rollout would stabilise or cut bills, according to Aurora Energy Research, which studied different speeds of rolling out wind and solar capacity up to 2030. Aurora said failure to rev up green power construction could lead to an 80% increase in CO2 prices by 2030, driving up wholesale power in Germany by 31% over price averages in first-half 2021. (Reuters)

Fossil flog – One of the world’s largest pension funds, ABP of the Netherlands, is to sell its entire holdings in fossil fuel companies worth more than €15 bln as pressure mounts on retirement schemes to protect long-term savings from the threat of catastrophic climate change, the FT reports. ABP said it expected to have sold the majority of its investments in oil, gas, and coal companies by Q1 2023. The holdings in about 80 companies currently account for almost 3% of ABP’s €528 bln total assets. The divestment means that ABP will no longer hold shares in oil major Shell. ABP said it did not expect the divestment, one of the largest to be announced so far by a leading pension fund, to have a negative impact on long-term returns.

Turkey understands – President Tayyip Erdogan said on Wednesday Turkey had signed a memorandum of understanding under which it will receive loans worth $3.2 bln to help it meet Paris Agreement goal, Reuters reported.  This confirms sums being reported earlier this month that Turkey was to receive the loans under a planned deal funded by the World Bank, France, and Germany. Turkey last week became the last G20 country to ratify the Paris pact after holding out in protest at being denied developing country status and consequent funding access. Some €2 bln would come from the World Bank, France €1 bln, and Germany just over €200 mln.

VOLUNTARY

Banks back adjustments – The Prince of Wales’ Financial Services Task Force, consisting of CEOs from the world’s largest banks, has launched a banks’ Net Zero Practitioner’s Guide as part of its wider Sustainable Markets Initiative. It acknowledged that net zero strategies must prioritise carbon reduction ahead of purchasing voluntary carbon credits, but that both actions will be necessary to achieve net zero targets. Once the Paris Agreement Article 6 infrastructure is in place, it will promote the procurement and use of correspondingly adjusted carbon credits that are transferred internationally for use by voluntary market participants seeking to make net zero or similar claims. That view runs counter to many in the market that don’t think it necessary to require correspondingly adjustments, because credits claimed by corporate actors are not counted towards the Paris Agreement NDCs of their country of domicile, merely reflected in companies’ annual or sustainability reports.

AND FINALLY…

Reduce ‘em if you got ‘em – Tobacco company Phillip Morris International (PMI) on Wednesday released its Low Carbon Transition Plan, bringing forward PMI’s ambitions to achieve carbon neutrality from Scope 1-2 emissions by five years to 2025, and to achieve carbon neutrality across its entire value chain by 10 years to 2040. In addition, it introduces a new goal for PMI’s critical suppliers to adopt science-based targets in line with the goals that PMI has already committed to, aligned with the 1.5C pathway necessary to meet the goals of the Paris Agreement. The company has also created a Portfolio of Climate Investments, with the portfolio’s advisory committee focused on managing and allocating the budget for climate-investment solutions through high-quality carbon credits for short-term neutrality targets, insetting within the value chain, and innovative technologies that remove CO2 from the atmosphere permanently.

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